You can now trade Ether on Coinbase’s trading platform.
If, for whatever reason, you aren’t aware; Ether is the native currency of Ethereum, a public blockchain that, unlike Bitcoin, makes it easy to build decentralized apps using common scripting languages.
In the recent months, Ethereum, which was designed by Russian-Canadian, Vitalik Buterin, in late 2013, has excited many (especially cryptocurrency enthusiasts) with its capabilities.
The announcement on Tuesday 24th May 2016, that Coinbase was now facilitating trading of Ether was made alongside that of rebranding the Bitcoin exchange’s trading platform.
Coinbase Exchange is now GDAX (Global Digital Asset Exchange).
Just so that there isn’t confusion; it is only the trading platform that carries the new name. Everything else remains as Coinbase (at least for now).
According to the blog post that announced the changes, the rebranding is a step to hosting even more cryptocurrencies.
“All our services will continue to support bitcoin and we look forward to adding additional digital currencies in the future,” it reads.
Some Bitcoin news sites are reporting rumors of Litecoin being the next altcoins to be traded on GDAX.
That aside, what informed Coinbase’s actions?
We need to look in the past
Without context, especially historical, Coinbase’s actions are simply a reaction to market trends.
That is not to say that something else is entirely responsible. The management team at Coinbase, like in any serious company, is answerable to investors. Profits come first.
Even so, Bitcoin block size politics nudged the move. There, I have said it.
How, you ask?
This is how…
On 27th December 2015 Brian Armstrong, CEO and Co-Founder Coinbase, tweeted the following: “Coinbase is now running BitcoinXT (BIP101) in production as an experiment, blog post with more details coming soon.”
After that all hell broke loose!
“What a disgrace… XT/BIP101 is not getting consensus. Stop trying to shove it down people’s throats,” one Twitter user responded.
The post was censored on the Bitcoin subReddit. Coinbase was even removed from the Bitcoin.org site.
Almost half of the Bitcoin community didn’t take kindly Coinbase (seemingly) throwing its weight behind BitcoinXT.
BitcoinXT was a code that Mike Hearn and Gavin Andresen worked on as the answer to the Bitcoin block scaling problem. While there were several other proposals, majority of those who were vehemently opposed to BitcoinXT supported the adoption of Bitcoin Core (another code and the most popular).
Mike ragequitted in January 2016 (describing Bitcoin as a failed experiment) after BitcoinXT faced a lot of opposition from the majority in the Bitcoin community.
Gavin Andresen stepped down early May 2016 as Bitcoin’s chief scientist after endorsing the Australian computer expert, Craig Steven Wright, claims of being Satoshi Nakamoto, which didn’t turn out to be true.
Coinbase seems to have stuck in a corner
After BitcoinXT failure, Coinbase didn’t find it quite comfortable to align itself with the proponents of Bitcoin Core.
When in late February a Bitcoin roundtable meeting in Hong Kong presented a consensus on the roadmap to Bitcoin block size scaling, which included the adoption of Bitcoin Core, Brian Armstrong, Coinbase’s CEO and co-founder was quick to point out in a medium post that it was ‘too little, too late.’
“I wasn’t at the event, but having read the plan, I unfortunately feel that it misses the mark,” he wrote.
He went on to state that “prioritizing SegWit before a block size increase would be a mistake”. He also expressed the view that July 2017, which the roundtable agreed upon as the date to raise the block size, was too far away.
His answer to the scaling problem?
The immediate adoption of Bitcoin Classic, a code that another team of developers is presenting to the Bitcoin community.
“The consensus proposal is a series of words and it’s still unclear if those will be upheld. Meanwhile,” he explained, “another team, Bitcoin Classic, has already taken action and shipped a working solution in code that we can use today.”
Those sentiments again marked Coinbase as standing in the way of Bitcoin Core.
Following this article, Adam Back, a cryptographer and supporter of Bitcoin Core invited Brian Armstrong to the next Satoshi Roundtable private retreat.
The event was being hosted (between 26th and 29th February 2016) by Bruce Fenton, Bitcoin investor and member of the Bitcoin Foundation board, in a secret location in North America.
Brian Armstrong accepted the invite.
Too late to change positions
However, it seems he wasn’t convinced a bit at the meeting. His next post told it all.
“As the conversations went on, I became less and less concerned about what short term solution we pick,” he wrote, “because I realized we all had a much bigger problem: the systemic risk to bitcoin if Bitcoin Core was the only team working on bitcoin.”
Brian Armstrong remained totally in disagreement with those who proposed Bitcoin Core. Even more, he seemed to grow less hopeful for the cryptocurrency.
“The fact that Bitcoin Core has allowed the network to reach this point is incredibly negligent,” he stated, “and I think says a lot about their motivations and competency as a team. There is no reason to roll the dice and see if this failure scenario comes to fruition.”
Back to the present
Just as the announcement of the rebranding and inclusion of Ether was about to be made, Fred Ehrsam, the other co-founder of Coinbase, penned his own Medium post. In it, he sung all praises for Ethereum.
“Ethereum has taken what was a four-function calculator of a programming language in Bitcoin and turned it into a full-fledged computer,” he stated, “We now stand only 9 months out from the beginning of the Ethereum network and the level of app development is already faster than Bitcoin’s.”
In the article, Fred Ehrsam was cautious not to sound like he was dismissing Bitcoin. “To be clear, I don’t think this needs to be a contest between Bitcoin vs. Ethereum and Coinbase plans to strongly support both,” he explained.
However, where his enthusiasm lies can be deduced. And it doesn’t seem to be on the side of Bitcoin.
It is on this backdrop that the motivation for rebranding and including altcoins on Coinbase’s trading platform is interrogated.
Image: Coinbase, screenshot